Should Your Business Consider a European Expansion?

Should Your Business Consider a European Expansion?

Europe has become a hotspot for global expansion, particularly for businesses looking for a more collaborative approach to economic growth. An exciting region with many expansion opportunities, much of Europe provides attractive culture, affluent populations, and economies that are fertile ground for growth. If you’re considering a European expansion, here are some questions to help determine if the target region is right for your goals.


1. Do You Have the Capacity for a European Expansion?

The most important piece when preparing for a European expansion is a proper business analysis. Going global is a "significant undertaking that could disrupt existing business activities." Therefore, decision-makers must truly understand the impacts, challenges, and benefits it will have on their business.

Before you begin to plan for an expansion, it is crucial to prepare for the added challenges your team may face. Any kind of global expansion will take extra staff time, planning, and resources before you begin to reap the rewards of gaining new customers. Ensure that your company has the capacity to do so before jumping right in.

2. Have You Chosen the Right Market?

One of the advantages of a European expansion is the free flow of goods through the European Union (though this free flow may experience a stall once the UK leaves the EU).  As soon as you enter one part of the EU, you will have the ability to sell your goods or services anywhere in the EU, giving your business access to 500 million customers. Your organization will also be able to sell goods and provide services in three non-EU states: Iceland, Liechtenstein, and Norway. This is done through the European Economic Area (EEA) Agreement of 1992, which extends the EU's trade policy to the three aforementioned nations.

This easy flow of goods can, however, obscure the fact that the individual countries still have their own cultures, habits, and markets. One strategy may work well in Finland, but fall flat in France. One product may be ideal for the Italian market, but not for the Czech Republic. Conduct a deep dive into prospective markets to find the right one for your company.

3. Do You Understand European Customers?

It is relatively easy to understand customer habits in your home country, since you’re already familiar with the culture. It can take more work to learn how a customer will react to your European expansion and marketing plan in a foreign country. Ensure you put significant time and effort into researching the market, as it can be the difference between expansion success and failure.

For example, when Walmart tried to expand into Germany, it failed to take into account German customers in building their stores. They built them outside of city centers where many don’t drive cars. They tried to import American cultural practices into Germany, and as a result, the stores did not perform as anticipated.

4. Do You Understand Local European Laws?

Despite having a single European market, the European Union is still divided along national lines by a plethora of laws. Every country approaches labor laws, taxation, consumer protections, and other aspects of business law from a different perspective.

French labor law is notoriously difficult to manage, so much so that President Macron is seeking to reform much of French business regulation with the PACTE Law—an effort to make starting and growing a businesses more attractive in France—while Denmark, Sweden, and Norway are famous for having business-friendly regulations. Each nation has its own unique processes for establishing a presence in its market, to employ workers, and conduct business. An experienced expansion partner can help you decipher local business laws, taxation, and labor laws when entering a new market—whether in Europe or elsewhere.

Have Confidence in Your European Expansion

These questions can help you decide if you're ready to pursue growth opportunities, gain customers, and increase revenue through a European expansion. Having an experienced partner on your side can help alleviate the stresses and complications that come with expansion—especially amid Brexit uncertainties.

Velocity Global's Employer of Record solution can help you gain quick, compliant access to European markets—and more than 185 countries around the globe. If you’re ready to break into the European market, reach out to us today to get started.

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